Türkiye’s New Climate Law: An Important Step Towards Carbon Governance and Economic Transformation
On 2 July 2025, Türkiye reached a significant milestone in its climate policy journey by adopting its first comprehensive climate law (“Law”). This legislation strengthens the country's commitment to the Paris Agreement and its goal of achieving net zero by 2053. With a focus on carbon pricing, emissions regulation and institutional governance, the Law establishes a more structured and transparent approach to climate action.
Notably, the adoption of the Law signals to the international community, particularly in the context of Türkiye's bid to host COP31, that the country is prepared to play a more active role in shaping global climate policy. However, while the Law is a step in the right direction, it is not the end goal. It marks the beginning of a complex, long-term transformation process that will require sustained political will, regulatory clarity and inclusive stakeholder engagement.
ETS and Carbon Markets: A Structural Shift
A core element of the Law is the establishment of a national Emissions Trading Scheme (“ETS“), which is largely modelled on the EU Green Deal and ETS. This cap-and-trade system places a binding limit on greenhouse gas emissions from major industrial sectors. Emission allowances will be distributed and regulated by the newly created Climate Change Directorate (“Directorate”), and there will be a three-year grace period before full compliance is enforced.
The enforcement measures under Türkiye's ETS are notably strict and include automatic account freezes, high penalty fees linked to recent market prices and the potential revocation of permits for persistent non-compliance. In some respects, these enforcement tools exceed EU standards, demonstrating Türkiye's commitment to establishing credibility and trust in its developing carbon market from the outset.
Alongside the ETS, the Law establishes the Carbon Markets Board (“Board”) (Karbon Piyasası Kurulu), a cross-ministerial body that will oversee key decisions relating to allowance allocation, sector coverage and eligibility for international crediting mechanisms. This whole-of-government approach reflects the recognition that effective climate policy must integrate energy, finance, trade and industrial planning.
Monitoring, Reporting and Verification (“MRV“): Raising the Bar
Transparency and accountability are central to the Law's design. All covered entities are now legally required to report their annual greenhouse gas emissions, which must be verified by accredited third parties. The Climate Change Presidency is responsible for overseeing compliance and assessing progress towards national targets.
Penalties for non-compliance are immediate and substantial. This emphasis on verified data and credible oversight sends a clear message to businesses: robust emissions accounting is no longer optional. Türkiye's MRV regime could set new standards for emerging economies in terms of transparency and enforcement.
Carbon Pricing, Offsets and Border Adjustments: Building Economic Resilience
Alongside the ETS, the Law introduces extra carbon pricing instruments, such as a domestic carbon crediting mechanism and a carbon border adjustment measure (Sınırda Karbon Düzenleme Mekanizması), which are intended to mirror the EU’s CBAM.
These instruments aim to mitigate the risk of carbon leakage, support fair competition for domestic producers and generate revenue from emissions-intensive trade. Aligning with EU instruments is a strategic move as the EU remains Türkiye's largest export partner, and regulatory compatibility will be critical for future trade flows and investment attractiveness.
Offsetting is permitted to a limited extent, with credits generated through domestic climate projects in sectors such as renewable energy, reforestation, and clean technology. Revenue from ETS auctions and pricing instruments is earmarked for climate-related research and development and adaptation, reflecting the reinvestment principles of the EU Innovation and Modernisation Funds.
Adaptation and Local Climate Action: Towards a More Resilient Future
A notable strength of the Law is its integration of climate adaptation into national and subnational planning. Public authorities must implement sectoral adaptation plans in critical areas such as water management, agriculture, biodiversity and disaster preparedness.
The Law also requires the development of a national zero-waste framework and emphasises the importance of safeguarding natural carbon sinks. These measures signal a shift in thinking from climate mitigation alone to a broader focus on systemic resilience.
In terms of biodiversity protection, the Law establishes a range of adaptation-related measures. These include expanding marine and terrestrial protected areas, addressing land degradation, combating desertification and erosion, and promoting the sustainable management of carbon sinks through afforestation and soil conservation. The Law also encourages the use of ecosystem-based adaptation and nature-based solutions in the agricultural sector, aiming to balance biodiversity conservation with the sustainable use of natural resources. However, the current provisions remain largely general in nature. The development of secondary legislation will therefore be essential to translate these broad objectives into science-based, measurable, and actionable measures.
Crucially, local governments are empowered through the introduction of mandatory Climate Action Plans at provincial level, overseen by Climate Coordination Councils. This decentralised approach mirrors EU best practice and ensures that local knowledge and participation are incorporated into the national transition.
Governance: Building institutional capacity
The Law introduces a governance model that balances national oversight with stakeholder inclusion. The Directorate will serve as the central regulatory authority, while the Board will provide strategic direction. A National Advisory Committee, comprising civil society and industry representatives, will assist in guiding policy development and ensuring transparency.
This layered governance structure enables both top-down policy coherence and bottom-up implementation, which is a necessary combination given the scale and complexity of climate transformation.
What does this mean for businesses?
The Law signals a clear shift for businesses: compliance is no longer optional, and emissions now carry a price. High-emission sectors such as cement, steel and energy must prepare for regulatory obligations, cost exposure and reputational scrutiny.
However, this shift also presents a strategic opportunity. Those that invest early in emissions data, climate governance and low-carbon innovation will be better placed to benefit from carbon markets, green finance and access to sustainable value chains. In this regard, the Law not only raises the bar, but also opens the door.
The Way Ahead: A Platform, Not a Final Destination
While the Law provides a strong legal and institutional foundation, key questions remain. For instance, it stops short of setting out a clear plan for phasing out coal and fossil fuels. Instead, it defers much of the transition to market mechanisms, which could lead to uncertainty regarding the pace and fairness of change.
Although up to 10% of ETS revenues can be allocated towards a just transition, the mechanism needs mandatory criteria and clear guidelines for allocation.
Furthermore, the Law does not yet set out an overarching climate investment strategy or explain how cross-sectoral synergies, such as those between energy efficiency, innovation and regional development, will be maximised.
Given these omissions, the Law must be accompanied by systematic and transparent monitoring to ensure that secondary legislation delivers enforceable, science-aligned emissions-reduction milestones, a credible fossil-fuel phase-out timetable and measurable biodiversity-protection objectives.
These gaps offer opportunities for future reform and policy development.
Conclusion: A First Step in a Longer Journey
The adoption of Türkiye's Climate Law is a significant step forward, both symbolically and substantively. It establishes a comprehensive framework for emissions governance, institutional coordination, and market-based mechanisms, aligning Türkiye more closely with EU climate policy.
However, the Law should be seen as the beginning of a broader transformation. If Türkiye is to realise a fair, resilient and inclusive low-carbon economy, future efforts must focus on transparency, just transition measures and long-term planning that goes beyond carbon pricing.
Ultimately, climate action is an evolving policy process, not a single legislative act. The Climate Law provides a foundation upon which more ambitious and comprehensive action can be built, and this process must continue with inclusivity and urgency at its core.
